The battle over Russia’s crude and oil products
In attempt to curb Russia’s oil revenues, Western countries imposed sweeping sanctions against Russian crude oil and oil products.
According to the International Energy Agency (IEA), Russia’s total exports of oil and petroleum products in February 2023 fell to 7.5 million barrels per day (bpd), from an average amount of 7.7 million bpd in 2022 (7.5 million bpd in 2021).
Russia’s revenues from oil and oil product exports decreased in February to $11.6 billion from monthly averages of $18.7 and $14.9 billion in 2022 and 2021, respectively, the IEA estimated.
Below are the sanctions so far imposed, their impact and Russia’s response:
– The G7, the European Union and Australia stopped buying all Russian crude oil delivered by sea – or 2/3 of all EU imports of Russian crude – from Dec. 5.
– The G7, EU and Australia also agreed to ban the use of Western-supplied maritime insurance, finance and brokering for seaborne Russian oil priced above $60 per barrel from Dec. 5.
– The market for old oil tankers boomed as new companies rushed to ship Russian crude.
– Russian President Vladimir Putin signed a decree banning the supply of crude oil and oil products from Feb. 1 to nations that abide by the cap.
– The Russian government banned domestic oil exporters and customs bodies from adhering to Western-imposed price caps on Russian crude.
– Russia’s oil and gas condensate production reached pre-sanctions levels – around 1.508 million tonnes per day – for the first time in February, Kommersant reported.
– Russian Deputy Prime Minister Alexander Novak said in early February that the situation with oil output and exports in the country is stable, despite Western price caps and sanctions.
– Russian oil producers have had no difficulties in securing export deals despite Western sanctions and price caps, Novak said.
– Russia’s crude oil loadings from its Baltic ports of Primorsk and Ust-Luga and the Black Sea port of Novorossiisk were some 10% below the target for February.
Russia plans to cut oil exports and transit from its western ports in March by 10% on daily basis from February, according to market sources and Reuters calculations.
– Putin signed a law fixing the discount on Urals crude oil for tax calculations.
– Russia is set to cut oil production by 500,000 barrels per day, or around 5% of output, in March.
– The G7 economies, the European Union and Australia stopped buying all Russian oil products delivered by sea from Feb. 5
– The EU from Feb. 5 set price caps of $100 per barrel on seaborn products that trade at a premium to crude, principally diesel, and $45 per barrel for products that trade at a discount, such as fuel oil and naphtha.
– In February the EU released from sanctions oil products which are produced from Russian oil outside the country and canceled the price cap for those oil products which are mixed with those from other countries.
– Russia’s February diesel exports to Turkey hit record high -traders, Refinitiv data.
– Russia exports diesel to Saudi via ship-to-ship loadings – traders, Refinitiv data.
– Russia begins diesel exports to Saudi Arabia -traders, Refinitiv data.
– Russia exports record diesel volumes to Brazil in Feb- traders, Refinitiv data.
– Russia diverts diesel exports after EU embargo to Africa, Asia and STS- traders, Refinitiv data.
– Russia price caps spur India interest in naphtha, fuel oil, but not diesel.
– Russia’s seaborne oil product exports in February fell by 10.4% month on month on a daily basis, data from industry sources and Reuters calculations showed.
Source: Reuters (Reporting by Reuters; editing by Guy Faulconbridge)